Bank of America officially integrated Zelle, the peer-to-peer (P2P) payment feature, into its own banking app to allow users to send real-time payments, according to The Boston Globe.

Bank of America and 18 other banks have partnered with Zelle developer Early Warning to launch this P2P app, which will allow them to attract users to their mobile banking apps. And once the rest of the banks fully launch the feature in 2017, Zelle will allow them to compete with the likes of Venmo and Square Cash.

P2P payments are growing fast, which makes them a valuable engagement tool.

Consumers are embracing mobile P2P payments. US mobile P2P volume is expected to reach $336 billion in 2021, which represents a 61% compound annual growth rate (CAGR) since the $19 billion in 2015. Banks may be trying to capture a share of this massive payment volume before likely industry leader Venmo can freeze them out — the PayPal owned P2P app processed $17.6 billion overall in 2016, with Q4 2016 marking the product's 14th consecutive quarter of more than 100% growth.

Adding a P2P feature could be an effective way for banks to better engage their consumers. The average user of Venmo accesses the service at least twice a week, which clearly shows that consumers are engaged. This could prove to be even more effective for banks because they can provide other services in their app, thus giving consumers more reason to stay engaged.

As banks boost adoption of their mobile offerings, they more effectively could compete with Venmo. Given that Zelle can be integrated into a bank's mobile app, the payment feature will immediately be available to a massive user base — Bank of America, JPMorgan Chase, and Wells Fargo alone count over 67 million customers as active mobile users. This number will continue increasing especially as consumers get access to more popular features like P2P payment capabilities. Banks will also take advantage of the fact that consumers trust their banks more when it comes to financial services — for context, 75% of customers trust their banks most to provide mobile wallets.

However, banks must move fast as Venmo continues to push out features that consumers seem to be embracing — after PayPal introduced Pay With Venmo, a buy button that allows users to pay with their Venmo accounts in certain apps, it saw that users of the feature were 30% more engaged.

Peer-to-peer (P2P) payments, defined as informal payments made from one person to another, have long been a prominent feature of the payments industry.

That's because individuals transfer funds to each other on a regular basis, whether it's to make a recurring payment, reimburse a friend, or split a dinner bill.

Cash and checks have historically dominated the P2P ecosystem, and they're still a popular tool. But as smartphones become a primary computing device, top digital platforms, like Venmo and Google Wallet, have enabled customers to turn away from cash and make those payments digitally with ease. Over the next few years, though overall P2P spend will remain constant, a shift to mobile payments across the board and increased spending power from the digital-savvy younger generation will cause the mobile P2P industry to skyrocket.

That poses a problem for firms providing these services, though. Historically, most of these players have taken on mobile P2P at a loss because it's a low-friction way to onboard users and won't catch on unless it's free, or largely free, to consumers. But as it becomes more popular and starts to eat into these firms' traditional streams of revenue, finding ways to monetize is increasingly important. That could mean moving P2P functionality into more profitable environments, leveraging existing networks of friends to encourage spending, or offering value-added services at a nominal fee.

Jaime Toplin, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile P2P payments that examines what's driving this shift to mobile P2P and explains why companies need to find a way to capitalize on it quickly. It discusses how firms can use the tools they have to gain in the P2P space, details several cases, and evaluates which strategies might be the most effective in monetizing these platforms.

Here are some key takeaways from the report:

Consumers still want mobile P2P services, and they're turning to them. Individuals pay their peers on a regular basis, and as smartphones are increasingly used as computing devices, these consumers look to such services for fast and easy ways to pay.

Monetizing P2P is more important than ever. Initially, P2P was a valuable onboarding tool for companies, and when it was still a small segment, taking it on at little value or a loss didn't have major implications. But as volume grows and user bases scale fast, finding ways to monetize quickly should be a priority for firms looking to stay ahead.

New technology could put some apps ahead of their peers. P2P continues to rely on networks, especially for informal, social transactions. But rather than having a large network, it's becoming important for firms to understand their user bases and the networks within them. This means that chat apps, and leveraging bot and AI technology, may offer a distinct advantage.

In full, the report:

Forecasts the growth of the P2P market, and what portion of that will come from mobile channels, through 2021.

Explains the factors driving that growth and details why it will come from increased usage, not increased spend per user.

Evaluates why mobile P2P isn't profitable for companies, and details several cases of attempts to monetize.

Assesses which of these strategies could be most successful, and what companies need to leverage to succeed in the space.

Provides context from other markets to explain shifting trends.

Interested in getting the full report? Here are two ways to access it:

Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> START A MEMBERSHIP

Purchase & download the full report from our research store. >> BUY THE REPORT